Lipstok: Central Bank Has Power to Veto ESM Decisions
Bank of Estonia governor Andres Lipstok has said that national central banks essentially have the right to veto decisions made under the European Stability Mechanism (ESM), hinting at a possible way out of the current wrangling over the 85 percent majority clause in the ESM Treaty.
After addressing Parliament, Lipstok was responding to a question from Reform Party MP Taavi Rõivas, who asked whether Estonians can veto ESM decisions through the central bank.
Rõivas pointed out that the European Central Bank has a requirement that decisions generally be approved by all of the central banks.
Lipstok replied that a bailout decision made in the ESM would be "such an important decision that the European Central Bank can issue such a position only at the level of its Governing Council."
The Governing Council consist of the 17 governors of the Eurozone central banks and the members of the ECB's executive board.
"In other words, if such a topic should come up, a hand must go up from behind the table with the sign reading 'Estonia' as well," said Lipstok.
The ESM, a new rescue funding program meant to replace earlier, temporary mechanisms, is due to be launched in July, provided Eurozone member states representing 90 percent of the capital commitments approve it.
Estonia is still a holdout. The Cabinet is waiting for a Supreme Court decision on whether the ESM Treaty is in line with the nation's Constitution. Chancellor of Justice Indrek Teder has said that it is not, because it allows decisions on granting aid to be adopted by an 85 percent majority. Expedited bailout decisions, he said, should be made unanimously.
Kristopher Rikken